The Interest Only (IO) mortgage will give you bar none the lowest monthly payment available. The (IO) payment is the lowest because it allows you the flexibility of only paying the interest portion of your payment (you waive the principal portion of your payment) for a defined period. The fixed interest only period is generally between 5-10 years.
The (IO) loan is a phenomenal cash management tool. Many individuals utilize the (IO) loan for a host of different reasons. Here are some common situations in which the (IO) is utilized:
There are many other reasons to utilize an (IO) Mortgage. However, like any mortgage program it isn’t a one size fits all proposition. You’ll need to examine the program against your own personal goals to determine what is right for you.
If paying your home off is your number one goal, than this loan is obviously a bad choice as you’ll be making zero payment towards reducing the balance.
If you know you’ll be moving up, or moving out, in the near future than limiting the amount you spend with an (IO) loan may be a great idea.
Don’t worry…..if you need more help we are always available. We’ll help you examine your goals to determine what Loan Simple option will most effectively accomplish them.